When trading shares and other financial instruments in an automated trading system, both buyers and sellers want to be capable of buying and selling instantly and to get the best possible price. Thus, a very liquid market is desirable since such a market provides for instantaneous trading, low spread, and a price, which reflects the market at each instant.
Sometimes a trader may want to sell or buy a specified volume of a particular financial instrument in another currency than the one used for that instrument in the automated trading system. Typically, the trader has then to give a price in the currency used for that instrument, and then, provided that the order is met on the market, his broker sells or buys the currency used for that instrument depending on whether a sale or a purchase has been made.
Usually, the trader does not have knowledge in advance of the exchange rate for such currency transaction, nor may the trader give conditional orders depending on the exchange rate obtainable. Further, it is believed that the trader does not obtain a price of the exchange rate, which always is the best possible price at the exact moment of the sale or purchase. Typically, the currency transaction and the sale or purchase are performed at different times, and a minor trader may often only obtain a current exchange rate on a day-to-day basis.